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Apple Needs New Growth to Justify Its Soaring Stock. It Won’t Be Easy.
Apple trades near record highs, with a market value no other company has ever attained. Now it has to justify the gains.
By
Eric J. Savitz
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Updated December 20, 2023 / Original December 20, 2023
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shares have had a historic year. The stock has rallied more than 50% in 2023 and recently closed at a record high. In terms of wealth creation, it has been the single best year for any company ever—Apple’s market value grew by $1 trillion.
But the unprecedented rally comes amid one of the company’s most disappointing stretches. In each of the past four quarters, Apple’s sales have declined from the prior year. The slide is likely to continue in the current December quarter. Apple’s most important hardware products—the iPhone, the Mac, and the iPad—still generate huge sales, but their growth is all but gone.
Meanwhile, Apple hasn’t had a hit new product since its AirPods, the pioneering wireless earbuds, launched in 2016. The backdrop makes the coming launch of the Apple Vision Pro, the company’s mixed-reality headset, all the more important. But success is far from certain: The promise of virtual and augmented reality has lured many entrants, including Meta
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Platforms and Microsoft, but there are few success stories.
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the ending, it's a long piece, ""Something Else
There are other possibilities. Lightshed’s Piecyk sees the potential for Apple to move its iPhone business to a subscription model, with a whole range of bundled services. Or maybe Apple can figure out a way to make a more substantial dent in the health and wellness market. Woodring thinks Apple could add enough features to the Watch—like noninvasive glucose monitoring—to make it a reimbursable medical device.
“They have to come up with a great new product, and it can’t be a $3,500 set of goggles,” says Walt Mossberg, the longtime Wall Street Journal tech columnist, who often spoke with Steve Jobs. He doesn’t think a car is the answer, either. “They have to think different,” Mossberg says. “That was the guiding principle in the second Jobs era.”
Mossberg thinks Apple could decide to take on Samsung Electronics in foldable phones, or create a version with a rollable screen. “Their heritage is that they’re a product company, not a services company.” And he says Apple might even be on the right track with a core element of the Vision Pro, mixing the real and virtual worlds. If the company can find a way to do that with a more appealing device, Mossberg says, “they just might have a world-beating product.”
Apple’s next great thing could even come out of left field and change everything, again, as the iPhone once did.
“You can’t connect the dots looking forward; you can only connect them looking backward,” Jobs said in his 2005 Stanford University commencement speech. “So you have to trust that the dots will somehow connect in your future. You have to trust in something—your gut, destiny, life, karma, whatever. This approach has never let me down.”
For now, Apple investors are keeping that faith. But it has been a long time since Steve Jobs was creating the magic at Apple. At some point—and probably as soon as 2024—Wall Street will need to see results.
Write to Eric J. Savitz at eric.savitz@barrons.com""
